Legal•Info

Charges Dropped Against Former Reagan Budget Director

Posted: Friday, June 26th, 2009 at 1:38 pm

New York—The U.S. attorney’s office in Manhattan announced late last week that it would be dropping all charges against David Stockman, the former Reagan-administration official who had been accused of fraud.

Stockman, who had been Reagan’s budget director from 1981 to 1985, later was named chief executive at Collins & Aikman, a Southfield, MI-based auto parts and accessories manufacturer. He became a member of that company’s board in 2000, then was CEO from 2003 to 2005. During that time, prosecutors had alleged, Stockman was manipulating company earning reports in order to mask its financial difficulties.

The company went bankrupt in 2005, and was one of the first of several bankruptcies which sparked a firestorm of trouble in the auto parts industry. The company manufactured automotive carpets, interior fabrics, acoustical materials, and convertible tops.

As the company’s CEO, Stockman had been charged with conspiracy to commit security fraud, to make false filings with the Securities and Exchange Commission, to falsify books and records, to lie to the auditors, to commit wire fraud, to commit bank fraud and to obstruct justice.

The 62-year-old was arrested in 2007, but released on $1 million bail. At that time, he told reporters that he had lost $13 million in the bankruptcy himself, and that he had done “absolutely nothing wrong.”

The U.S. attorney’s office in Manhattan claimed that a “renewed assessment of the evidence,” as well as information learned after Stockman’s indictment, helped them decide to drop the charges against Stockman and three others who were involved in the case.

During his time with the Reagan administration, Stockman was a bit of a controversial figure. He predicted huge budget deficits, as well as speaking out against Reagan’s across-the-board tax cuts, calling those a “Trojan horse” meant to lower taxes on the rich.

Elkan Abramowitz, Stockman’s lawyer, expressed gratitude that the case had been reviewed by prosecutors. “We were confident at some point that David Stockman would be vindicated because we knew form the beginning he had committed no crime,” said Abramowitz.

“He’s been devoting all his efforts to proving his innocence,” the attorney continued. “He has, and I’m extremely gratified that the government agrees.”

Stockman had no comment as to what his future plans were.

 

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